(EDITORIAL from Korea Times on Aug. 28)

Grand compromise
Korea can ill afford to delay overhauling labor market

The nation's largest labor umbrella group has decided to return to the tripartite talks to discuss labor market reform four months after quitting the negotiating table. Most affiliated industrial unions supported the Federation of Korean Trade Unions' decision, with some hard-liners representing metal and chemical unions opposing it.

A meeting among representatives of labor, management and the government is expected to take place soon. The government and employers welcomed the resumption of talks. It is a welcome development that the trilateral labor talks will resume after many twists and turns.

The FKTU, one of Korea's two major labor umbrella groups, was supposed to hold a leadership meeting last week to make a final decision on its participation in the talks. But its leaders could not even enter the conference room due to a sit-in protest by 100 hard-liners protesting the resumption of talks with employers and the government.

The labor group's return to the talks will open the floodgates to discuss overhauling the flawed labor market, but there is certainly a long way to go before a grand compromise is reached among the three entities.

Behind the FKTU's decision to return was the Ministry of Employment and Labor's assurance that the government will take time to push for the two most sensitive labor issues: adopting the so-called peak wage system and making dismissals of underperforming employees easier. But the soon-to-be resumed talks could collapse at any time because the labor ministry still reportedly believes that the two issues should be dealt with in the talks.

Also, there are several other contentious issues, including income disparity between regular and contract workers, extension of working hours and performance-based wages. Given that labor, management and the government had narrowed differences on many issues before the FKTU quit the talks in April, it will be better to solve easier problems first ― gradually.

Few deny the urgent need to reform our labor market. Aside from the deep-seated youth unemployment problem, Korea's low growth and rapid aging are plausible reasons for accelerating labor market reform.

The problem is that employees and employers are trying to gloss over the reality.

Unions claim that the government's labor market reform proposals would only benefit large businesses with internal reserves amounting to hundreds of trillions of won by making it easier for them to dismiss underachievers. But this simply overlooks the fact that increasing flexibility of the labor market can, too, make it easier for displaced workers to be rehired.

Employers and the government readily overstate the effect of introducing peak wages, saying youth employment will increase sharply at once. But there is no guaranteeing that companies will hire more workers only if the peak wage system is adopted.

Korea can ill afford to postpone streamlining its labor market, especially considering that many of its flagship industries have been losing their competitive edge. So it is imperative that the three entities reach a compromise quickly and the relevant legislation process be wrapped up by the end of the year. All this requires employees and employers to meet halfway.
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